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Argentina And Its Latest Nationalization
"..will keep going down until the last person turns out the lights..." Maybe it is a bit too early for such tremendous prediction. I do not think anyone will turn off lights in YPF. Quite the contrary, the outlook for this companie and its stock price is more than interesting. The argentine government knows very well that it is playing a big one with this takeover, just because if it goes wrong there shall be no fuel at the pumps. While your article has some interesting aspects, I think you're wrong in predicting a situation of that nature.
May 31, 2012. 02:40 PM
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How To Profit From Argentina's Pending Economic Meltdown
I would ask you to please review your notes in relation to your statement that the Argentine ADRs would fall in the scenario of a peso collapse. Historically when there is a run against the peso here in Buenos Aires people already knows about several shelters for keeping money value:
The first non financial option available for most of the people is to buy goods of any kind.
Another one, from a financial stand point but not available for everyone is to buy US dollars either at the white, blue or black market.
Keeping with the financial options, another one is to invest in short cd certificates at positive rates that are considerably higher than the inflation rate to stop the outflow of deposits.
The purchase of shares in the stock market is another option to consider. Historically we find that far from falling, the shares maintain a high correlation with the rate of devaluation.
That said, your appreciation is that in case of a peso runaway, the ADRs value would fall because of the cash with pay off transaction, you recommend US investors to short sell. Please be advised: if the peso is about to collapse the government is going to immediately shut down the possibility of doing this cash with pay of transaction so the variation difference in the price of the stock in Buenos Aires vs. its ADR on the NYSE would not be significant, and the ADR would not have reasons to fall from this stand point, since like I said before, historically the stocks tend to follow the devaluation rate, and many times to overshoot because of the initial investors panic.
May 25, 2012. 03:40 AM
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